How India grows at night while the government sleeps

Gurcharan Das is an author and a public intellectual. He is the author of The Difficulty of Being Good: On the Subtle Art of Dharma which interrogates the epic Mahabharata. His international bestseller, India Unbound, is a narrative account of India from Independence to the turn of the century. His latest book India Grows At Night – A Liberal Case For a Strong State (Penguin Allen Lane)has just come out. He was also formerly the CEO of Proctor & Gamble India.

In this interview he speaks to Vivek Kaul on why Gurgaon made it and Faridabad didn’t, how the actions of Indira Gandhi are still hurting us, why he cannot vote for anyone in the 2014 Lok Sabha elections and why democracy has to start in your own backyard if it has to succeed. Excerpts:

What do you mean when you say India grows at night?

Essentially the full expression is "India grows at night while the government sleeps". I thought that would be insulting to put in the title. So I left it at India Grows at Night. And I subtitled it A liberal case for a strong state. The basic idea is that India has risen from below. We are a bottom up success, unlike China, which is a top down success. And because our success is from below, it is more heroic and also more enduring. But we should also grow during the day, meaning we should reform our institutions of the state, so that they contribute much more to the growth of the country. We cannot have a story of private success and public failure in India.

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Could you explain this through an example?

I start chapter one of the book with a contrast between Faridabad and Gurgaon. If you were living in Delhi in the seventies and eighties, the big story, the place you were going to invest in was Faridabad. It had an active municipality. The state government wanted to make it into a showcase for the future. It had a direct line to Delhi. It had host of industries coming in. It had a very rich agriculture. It was the success story. So if you were an investor you would have put your money in Faridabad.

And what about Gurgaon?

In contrast there was this village called Gurgaon not connected to Delhi. No industries. It had rocky soil, so the agriculture was poor. Even the goats did not want to go there. So it was wilderness. And yet 25 years later, look at the story. Gurgaon has become an engine of international growth. It is called the millennium city. It has 32 million square feet of commercial space. It is the residence of all the major multinationals that have come into the country. It has seven golf courses. Every brand name, from BMW to Mercedes Benz, they are all there. And look at Faridabad (laughs)…

Faridabad missed the bus?

Faridabad still hasn’t got the first wave of modernisation that came to India after 1991. It escaped Faridabad. Only now it’s kind of waking up. And Gurgaon did not have a municipality until 2009. This contrast really is in a way the story of India grows at night. And the fact is that the people of Gurgaon deserve a lot of credit because they didn’t sit and wait around. If the police didn’t show up they had private security guards. They even dug bore-wells to make up for the water. The state electricity board did not provide electricity, so they had generators and backup. They used couriers instead of the Post Office. Basically they rose on their own.

So what is the point you are trying to make?

My point is that neither Faridabad nor Gurgaon is India’s model. Faridabad is a model where you have an excessive bureaucracy. Why did Faridabad not succeed? Because the politician and bureaucrat tried to squeeze everything out in the form of licences.

And Gurgaon’s disadvantage turned out to be its advantage. It had no government. So there was nobody to bribe. But at the end of the day Gurgaon would be better off, people would have happier if they had good sanitation, if they had a working transportation system, they had good roads, parks, power etc.

All that is missing…

All the things that you take for granted that you would get in a city, you shouldn’t have to provide them for yourself. This is the point. Neither model is right. And we need to reform the institutions of our state. And we need to create what I call a strong liberal state.

What’s a strong liberal state?

A strong liberal state has three pillars. One, an executive that is not paralysed, like Delhi is right now, where you have push and drag to get any action done. Second, that action of the executive is bounded by the rule of law and, third, that action is accountable to the people. When I mean a strong state, I am not talking about Soviet Russia or Maoist China. I am not even talking about a benign authoritarian state like Singapore, which is very tempting, because it has got such high levels of governance. I am talking about a classical liberal state - the same kind of state that our founding fathers had in mind or the American founding fathers had in mind when they thought about the state. And so that is not easy to achieve.

Why do you say that?

It is not easy to achieve because some elements in these three pillars fight with each other. In other words you have an excessive drive for accountability then the executive gets weakened. I mean right now the Anna Hazare movement has so scared the bureaucrats that they won’t put a signature on a piece of paper. The Anna Hazare movement is a good thing because it awakened the middle class but it also weakened the executive. So, today more important than even economic reforms are institutional reforms - i.e. the reform of the bureaucracy. If a person is promoted after 20 years regardless of his performance, there are repercussions. If it doesn’t matter whether he is a rascal or outstanding, and both are treated the same, you won’t get high performance. You will get a demoralised bureaucracy. Those are the kind of reforms we need.

What are other such reforms?

Take the case of the judiciary, why should it take us 12 years to get a case settled when it takes two or three years anywhere else? You go to a police station to register an FIR, do you think they will do it? Either you have to bribe somebody or lagao some influence. You have this rising India amidst a very very ineffective state.

One of the things you write about in your book is the fact that India got democracy before it got capitalism. World over it’s been the other way around. How has that impacted our evolution as a country?

That also explains some of our problems. By getting democracy before capitalism, you had a populist wave. The politicians, when they thought about going to elections, started realising ke bhai we will tell people that I’ll give you Rs 4 for a kilo rice and get elected. In Punjab the politicians said we will give free electricity to the farmers and got elected. So you killed your finances through this populism. The states which did this really went bankrupt. Punjab and Andhra Pradesh, which did these two things, couldn’t pay their salaries to their bureaucrats.

And this started with Nehru’s socialism?

Nehru’s socialism created the illusion of a limitless society, that the state would do everything. Jo kuch hai, which we used to do for ourselves, through our families, etc, we now expected the state to do. That was the message given by the socialists. The fact is that the state did not have the capacity. In the courts judges knew their jobs. It was a good judiciary. Even the police was very good but suddenly you expanded the mandate so that half the cases today are government cases. You haven’t been paid a refund. Or the government is taking your land or something and so you go to court. So the guilty in many cases is the state.

What you are suggesting is that the mandate of the state was expanded so much that it couldn’t cope with it?

And they did not expand the capacity. Suddenly you needed a 10-fold increase in judges and a 10-fold increase in bureaucrats. This is because the jobs you expected this people to do were so much greater. And you told people, especially workers and government servants, that you have rights. So a school teacher suddenly realised that he did not have to attend school, he could get away with it. The person who was his boss or her boss was too scared because of the union of teachers. So one out of four teachers is absent from our schools. And nothing happens to that person. I am answering your question about how embracing democracy before capitalism hurt us. We became more aware of our rights. We tried to distribute the pie before the pie was baked. Before the chapati was created we started dividing it.

In fact there is a saying in Punjabi ke pind vasiya nahi te mangte pehle aa gaye (the village is still being built and the beggars have already arrived)…

Bilkul. Perfect. That’s an even a better saying. This has been one of the problems. In 1991, we did start building the economic base to support a democracy like ours. But these people frittered away some of the gains. Just see how much subsidy is being given on petroleum products. It is around Rs 1,80,000 crore. I mean you could transform your school system with that kind of money.

And the health system…

Yes even the health system.

How much do you think the socialism of Nehru and Indira Gandhi is holding us back?

The damage that Indira Gandhi did was far greater. Her licence raj combined with the mai baap sarkar, this double whammy, gave the illusion to the people that the state would do everything. Nehru had never talked about a mai baap sarkar. The second was the damage she did to our political institutions. We owe Nehru a great debt because he built those institutions. Our modern political democracy we owe it to him. But she did a lot of damage to those institutions.

Could you elaborate on that little?

During the period she was the Prime Minister, I think she dismissed 59 elected governments in states. Now we hardly hear of this. This is partly a reaction to what she had done. She tried to change India’s culture and change our political system. A lot has been written about the emergency and so on. But the enduring damage we don’t realise. Before her, Chief Ministers were a little afraid when a secretary said no sir you can’t do this. And if you tried to do it, the secretary wouldn’t bend very often. Now they just transfer. Look at what Mayawati did. Also, after Indira Gandhi, the police became a handmaiden of the executive. The police lost its independence. Even the judiciary was damaged. She wanted committed judges. Fortunately the Supreme Court did not succumb to that rot.

“It is tempting to compare crisis-ridden Hastinapur with today’s flailing Indian state,” you write.Could you explain that in some detail?

Before this I wrote this book called The Difficulty of Being Good. I interrogated the Mahabharata in a modern contemporary way. And I realised that the Mahabharata is us, still. The great scholar Sukthankar, the editor of the critical edition of the Mahabharata, had once said that the Mahabharata is us. And I had always wondered what he had meant. I realised after reading the book that really it’s a story of India. And why I preferred the Mahabharata to the Ramayana is because in the Ramayana the hero is perfect. The brother of the hero is perfect. The wife of the hero is perfect. Even the villain is perfect. Luckily I had done Sanskrit in College and so I went back to my roots. I went to study in Chicago.

And what did you realise after studying the Mahabharata?

Essentially the Mahabharata is about the corruption of the kshatriya institutions of that time. The way the rulers, the nobles behaved, it clearly upset the author of the Mahabharata, or we should say authors, because it was continuously evolved over 400-500 years. They were very upset and enraged as today young Indians are enraged by the government. They were enraged by the institutions of these kshatriyas. The sort of big chested behaviour. The idea that you went to heaven if you died fighting on the battle field. That sort of notion. So most people think Mahabharata is about war, but actually it’s an anti-war epic.

So what is the point you are trying to make?

In Mahabharata, Hastinapur is the capital of the kingdom of the Kauravas. The Pandavas have created a new capital at Indraprastha. The point is crisis-ridden Hastinapur is somewhat like our crisis-ridden institutions of today. People were impatient and they were enraged by what was going on and so they had to wage a war at Kurukshetra. And I just hope that we don’t have to do that. We can reform the institutions before we reach that point. That’s the comparison to Kurushetra and Hastinapur that I spoke about.

You were a socialist once?

I was a socialist like all of us when we were in the 20s and 30s. But then we could see that Nehru’s path was leading us to a dead-end. Certainly a part of India Unbound is a story of the personal humiliations that I experienced, and on top of that Indira Gandhi’s failures really converted me. When the reforms came in 1991 I had become a libertarian. I really celebrated the reforms. For me that was Diwali and so I began to believe that the story of India rising without the state was a sustainable story. And I began to believe that this was a heroic thing and a laissez faire state was the best state. Back then, in my view, the state was a second order phenomenon.

Now, writing this book partly, and looking back over twenty years, I have concluded that state is a first order phenomenon. So I have gone from being a socialist to a libertarian to what I would go back and say is a classical liberal, who really doesn’t believe that laissez faire is the answer, and who does believe that you need the state.

Can you elaborate on that?

You need a limited state and not a minimalist state as Nozick (Robert Nozick, an American political philosopher) would have said. But that limited state must perform. So I have come to realise that the success after 1991 has partly been because there were regulators in those sectors which rose. The election commissioner, the RBI, Sebi, these have all contributed. Or even the first Trai (Telecom Regulatory Authority of India, the telecom regulator) under Justices Sodhi and Zutshi. That first Trai sent the right signals. If we had left it to the Department of Telecom (DoT) and did not have any regulator things might have been different. DoT wanted to crush the new private companies. So what I am saying is that you need good regulators. You need government as a good umpire. You don’t need government to own Air India. But you need a good civil aviation regulator who will ensure a level playing field for everyone in the market.

You explain in some depth in your book as to why Indian political parties treat voters as victims. One can see that happening all the time and everywhere…

And it also explains why I cannot vote for anybody in 2014. Really, as an Indian citizen I have been thinking who will I vote for? Every party treats voters as a victim. They are all parties of grievance. We don’t realise that one third of India is now middle class. This new middle class are tigers. They have just made it. They don’t want to be reminded that they are victims. They are looking for the state to further their rise. And they are looking for good roads, good schools and these things.

But nobody talks about development in India…

Yeah. The BJP, if you scratch them, they are talking about 1,000 years of Muslim oppression. Congress says you are victim of globalisation and liberalisation. So we will give you free power, free this and free that, NREGA, etc. The Dalit parties say you are a victim of oppression. OBC parties say you are a victim of upper caste oppression. Nobody is talking about the reform of the institutions. Even the Anna Hazare movement was talking about only one Lokpal, which is fine, but it had to be couched in a bigger story.

You critique the Anna movement by saying that they have further undermined politicians and political life. Could you explain that in detail?

They have undermined politics and political life. It is very easy to do that. When you attack politicians then you are also unwittingly attacking the institution of elections. The good thing is that it has put fear in the minds of politicians. Whether the Anna Hazare movement fails or succeeds is no longer important. What is important is the legacy that it has woken up the middle class. That won’t go away easily. The question then for a young person today is that the Anna movement may have gone, but what can I do?

The answer is start with your neighbourhood. Start with your ward and see what can be done. And that is the local democracy I am talking about. That’s where politics begins and that’s where habits of the heart created. I am so in favour of grassroots democracy, the fact that we should put the power downwards. Also, even in the rhetoric of the Anna Hazare movement, they talked about the gram sabha, the mohalla sabha, that’s where we get the habits of the heart.

What about Arvind Kejriwal’s decision to enter politics? How do you view that?

Before I get to that let me discuss something that I talk about in my book. In this book I hope for a formation of a new political party along the lines of the erstwhile Swatantra Party. But the agenda of this party is not just economic reform but institutional reform. At the Delhi launch of my book Arivnd Kerjiwal was there. TN Ninan, Chairman of Business Standard newspaper,was moderating the discussion and he said since both of you are advocating a political party, why don’t you join hands. I said, I admire Kejriwal, but he has got all kinds of crazy people around him, who still think that reforms were a bad India. Also, they never talk about institutional reform. So I am not sure that we could be together. But I said where we would be together is that both of us are tapping into the new middle class, which is impatient, confident, assured and which wants to get rid of corruption. But I feel that we need the hard work of institutional reforms and that street protest is not the answer. I also said I am so glad that Kejriwal is now looking at politics because that is the right route to go.

One of the things that one frequently comes across in your book is that you are hopeful that the politics of India will change in the next few years as more and more people become middle class.

Yes.

But it doesn’t look like…

It doesn’t look like because politics has been left behind. But now they are realising. They have been shaken up because so many of them (the politicians) have gone to jail. Even the language is a little more cautious now.

So you see the kind of chaos that prevails right now will go away?

It is only out of chaos that something happens. As Nietzsche (Friedrich Wilhelm Nietzsche, a German philosopher) said, it is the chaos in the heart that gives birth to a dancing star. I see things positively even though we have been a weak state. But as they say, history is not destiny.

“The trickling down of power has made India more difficult to rule,” you write. Could you explain that in the context of the politics that is currently playing out?

It has made India more difficult to govern. But it remains a very important development because I am in favour of federalism. The best thing about FDI in multi-brand retailing is that they have given the states the freedom to decide whether they want foreign investment or not. So imagine an FDI decision is now in the hands of the state. And I think that is wonderful because each state is like a country in India. The state of UP has 180 million people and I have no problem with the trickling down of power. My problem is that we should be able to have an effective executive at the centre. Today we have a very weak Prime Minister. We need a stronger person in the role. We don’t want an Indira Gandhi, but we want a strong person who can be an institutional reformer.

You hope for the rise of a free market-based party like the erstwhile Swatantra Party (a party formed by C Rajagopalachari and NG Ranga in 1959 to oppose the socialist policies of Nehru). Do you see really see that happening?

You have to be lucky to some extent and hope to get a young leader. I don’t know who it will be. But there will be somebody in their thirties and forties. Then the country will rally behind them. The way they rallied behind the Kejriwal-Anna Hazare movement. In one sense the last thing India needs is a another political party. But I also see that I cannot vote for any political party. I see that there is a wing of the Congress which does not like this free power and entitlement culture and the corruption that is being bred in the Congress. There are people even in the BJP who have faith in the past, but they are not anti-Muslim necessarily. So I think they will come together for a secular political liberal party.

Similarly there are people in the regional parties. And this is a good time for a liberal party. Swatantra Party was at the wrong time. They were too early. They were ahead of their time. So if we are lucky we will throw up a leader, but you can’t depend on that. But the hopeful thing is the rise of the middle class which will make the politics change.